Pound Sterling Forecast https://www.poundsterlingforecast.com Expert opinions on foreign exchange Mon, 04 Mar 2024 09:27:34 +0000 en-GB hourly 1 https://wordpress.org/?v=6.4.2 Could the Spring Budget force a market reaction from the Pound? https://www.poundsterlingforecast.com/2024/03/could-the-spring-budget-force-a-market-reaction-from-the-pound/ https://www.poundsterlingforecast.com/2024/03/could-the-spring-budget-force-a-market-reaction-from-the-pound/#respond Mon, 04 Mar 2024 09:27:33 +0000 https://www.poundsterlingforecast.com/?p=43087 Of the major currency pairs the Pound has historically been one of the more volatile currencies. Historical events such as Black Wednesday when the Pound collapsed in 1992, and the substantial drop off the day after the Brexit vote when markets were caught off guard spring to mind when considering GBP volatility.

This tendency for GBP volatility has waned recently with the Pound recently remaining very flat, especially against the Euro.

Even the confirmation last month that the UK economy is officially in a recession after a slow economic output in the 2nd half of 2023 did little to the Pound’s value.

Since mid-January, EUR/GBP has remained within just a 100-pip range and the implied volatility is close to its lowest in 30-years according to Commonwealth Bank.

Market participants hoping for GBP volatility will look to this weeks Spring Budget which takes place on Wednesday. It will be his final Budget before the next general election and as a member of the Conservative Party he may try and pulls out all the stops to try and garner some support for the Party.

It’s no secret that the Conservative Party has been losing favour within the political polls, and national insurances tax cut is expected to be on the cards.

We know that the Budget carries the potential for substantial market movements after the crash in GBP’s value in the wake of Kwasi Kwarteng’s Budget which cost Liz Truss, the Prime Minister at the time her job.

Aside from the focus on Wednesday’s Spring Budget other events to look out for this week are the European Central Banks (ECB) meeting on Thursday and Friday’s US Non-Farm Payroll figures.

No changes are expected from the ECB but any major updates to the current interest rate forecasts could impact EUR exchange rates.

The US economy has also shown signs of a slight slowdown recently so I think this Friday’s reading will be monitored closely.

If you would like to discuss an upcoming currency transfer involving the Pound, feel free to contact me (Joe) directly on joseph.wright@lumonpay.com with an overview of your plans. We offer competitive exchange rates and also a number of different contract types which can help you with your plans.

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How will the Budget influence Sterling exchange rates? https://www.poundsterlingforecast.com/2024/03/how-will-the-budget-influence-sterling-exchange-rates/ https://www.poundsterlingforecast.com/2024/03/how-will-the-budget-influence-sterling-exchange-rates/#respond Fri, 01 Mar 2024 10:09:54 +0000 https://www.poundsterlingforecast.com/?p=43084 The Spring Budget is due to take place on Wednesday 6th March. With a possible general election looming this Budget will be likely to try and persuade voters to keep the Tories in power.

As the UK recently fell into recession after falling by two quarters in a row it is not expected to last for too long.

The Bank of England governor Andrew Bailey has already suggested that it may be over and has told MPs the same.

The Chancellor Jeremy Hunt is due to cut taxes but with an economy under pressure the tax cuts may not be too big.

According to some other reports National Insurance is also due to be cut but this could reduce the government’s spending. However, arguably if people have more money to spend this could help to boost the economy so there is a fine balance to be made.

If the Budget is taken well this could lead to a small recovery for Sterling exchange rates against both the Euro and the US Dollar.

Sterling vs both the Euro and the US Dollar has been range bound since the start of the year. Monetary policy has remained unchanged both here and on the continent and it doesn’t appear to be changing anytime soon.

Inflation still remains higher than required which has decreased the chance of an interest rate cut happening anytime soon.

Therefore, it is likely to be other political and economic developments that are likely to influence what is happening to Pound exchange rates as we move into March.

If you would like a free quote when transferring currency and would like to save money compared to using your own bank then please contact me for a free quote.

I have worked at one of the UK’s longest established currency brokers for over 20 years and I’m confident of making the process simple and straightforward.

Email me directly with a brief description of your requirement to tom.holian@lumonpay.com

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Sterling supported by BoE Ramsden comments https://www.poundsterlingforecast.com/2024/02/sterling-supported-by-boe-ramsden-comments/ https://www.poundsterlingforecast.com/2024/02/sterling-supported-by-boe-ramsden-comments/#respond Wed, 28 Feb 2024 08:46:20 +0000 https://www.poundsterlingforecast.com/?p=43080 It has been a quiet week for the markets with GBPEUR, GBPUSD and EURUSD remaining range bound. The pound started the week slightly softer following comments from ECB President Christine Lagarde; however, Deputy Governor of the BoE Dave Ramsden supported the value of the pound with hawkish comments of his own.

Lagarde noted on Monday, that while inflation was gradually approaching the central bank’s targets, the ECB remains dedicated to maintaining its current policy measure for the foreseeable. These comments massively downplay the prospect of an interest rate cut in April and have therefore lend support to the value of the euro against both the dollar and pound.

Dave Ramsden indicated on Tuesday that the BoE would also maintain it’s ‘higher for longer’ stance, so no change is expected from the UK either. The lack of change or expected change in interest rates is leading to exchange rates remaining static.

Next week’s budget announcement from the UK Government could change that. The conservative party currently behind in the polls during an election year, may announce widespread tax cuts to gain support from the electorate.

UK inflation remains sticky at 4% and the BoE will watch the budget tentatively. Widespread tax-cuts could risk spiralling inflation out of control again and any move from the Government that is seen as reckless, could pile pressure on sterling. The Liz Truss – Kwasi Kwarteng budget caused GBPEUR to drop from 1.12 – 1.04 in a matter of days.

The next key announcements come from the US and Eurozone. US GDP data is released later today and is expected to show no change at 3.3%. This would be a positive for the greenback with the Eurozone and UK economies flatlining.

German Retail Sales are expected to drop 1.5% which could put pressure once again on the euro as it supports predictions that Germany is heading for a recession.

If you have an upcoming requirement involving any currency and require expert assistance; please reach out to me directly on richard.nugent@lumonpay.com

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Will the Pound to Euro exchange rate break out of its current range this week? https://www.poundsterlingforecast.com/2024/02/will-the-pound-to-euro-exchange-rate-break-out-of-its-current-range-this-week/ https://www.poundsterlingforecast.com/2024/02/will-the-pound-to-euro-exchange-rate-break-out-of-its-current-range-this-week/#respond Mon, 26 Feb 2024 09:17:30 +0000 https://www.poundsterlingforecast.com/?p=43078 It’s been a quiet start to the year for GBP exchange rates, and through the month of February the Pound to Euro exchange rate has remained within a tight trading range.

GBP/EUR has hovered around the 1.1700 level moving slightly above or below this level, with the upside being 1.1740 which is just below the annual high of 1.1770.

To the downside, there appears to be support for the Pound around the 1.1660 level and the pair have barely moved outside of this 80-pip range over the past month.

Those following the Pound will be aware that interest rate changes and the factors affecting the changes are what’s driving the Pounds value at the moment.

The UK is now officially within a recession but expected to bounce back straight away with strong Retail Sales figures released mid-month underpinning these expectations, so even the news of the UK officially entering recession didn’t weaken the Pound enough to see GBP/EUR break below 1.1660.

This week economic data out of the UK is light. The only events that could offer insight into the UK’s monetary policy moving forward and potentially impact the Pound are the speeches from Bank of England members which take place this week. These will take place on Monday, Tuesday and on Friday.

Perhaps the key economic release this week will be out of the Eurozone as Inflation data for Germany, France and Spain will be released individually on Thursday and then the Harmonized reading for the Eurozone as a whole will be released on Friday. This figure is expected to drop to 2.9% for February Year on Year which a drop from the January reading of 3.3%.

The market expectation is that if the reading come out below the expectation of 2.9%, this would underpin expectations of rate cuts and likely weaken the Euro.

If you have an international payment requirement to make and would like to discuss your plans, you can contact me directly on joseph.wright@lumonpay.com with an outline of your plans. We will be happy to offer insight and competitive exchange rates which may help you save money when making currency exchanges.

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Will the Pound drop now that the UK is in recession? https://www.poundsterlingforecast.com/2024/02/will-the-pound-drop-now-that-the-uk-is-in-recession/ https://www.poundsterlingforecast.com/2024/02/will-the-pound-drop-now-that-the-uk-is-in-recession/#respond Mon, 19 Feb 2024 09:22:47 +0000 https://www.poundsterlingforecast.com/?p=43076 Much of the talk regarding the Pound’s value and the performance of the UK economy this month had been geared towards last week’s GDP release for Q4 of 2023.

It’s now official that the UK is a shallow recession, and there was a drop in the Pound’s value when the official figures were released as the drop in economic output in Q4 was higher than expected.

The markets had expected to see a -0.1% drop quarter-on-quarter, but the official reading came out at -0.3 confirming the recession and also a slightly deeper recession than expected.

Since last Thursday’s release the Pound has managed to claw back the losses and has begun the week in quite a strong fashion, with GBP/EUR back above 1.1700 and GBP/USD still trading comfortably above 1.26.

Personally, I think the Pound hasn’t been heavily impacted by the worse than expected GDP readings and official recession being confirmed as a rebound in the economy is expected.

The markets will be more focused on the more recent economic updates now as they could impact when the Bank of England will begin cutting interest rates.

Inflation data last week was lower than expected, putting pressure on the BoE to begin cutting rates sooner than later. Retails Sales last week also came out much high than expected which is perhaps why the Pound has recovered last Thursday’s losses so soon.

This week offer another insight into the UK economy’s heath as PMI readings will be released on Thursday. They will cover Services and Manufacturing data with Services being the key for the UK economy. Another reading above 50 is expected which demonstrates growth in the UK’s most important sector. The January reading was 54.3 and 54.4 is expected this time which will be positive for the UK economy and could give the Pound a boost if the reading is above this.

If you would like to discuss the Pound’s recent and potential movement moving forward, please feel free to get in touch with me directly on joseph.wright@lumonpay.com and I will be happy to discuss your plans. We offer very competitive quotes and market insights.

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UK Inflation remains sticky at 4% – will this help the pound? https://www.poundsterlingforecast.com/2024/02/uk-inflation-remains-sticky-at-4-will-this-help-the-pound/ https://www.poundsterlingforecast.com/2024/02/uk-inflation-remains-sticky-at-4-will-this-help-the-pound/#respond Wed, 14 Feb 2024 10:05:24 +0000 https://www.poundsterlingforecast.com/?p=43072 UK inflation is holding steady at 4% according to data released by the Office for National Statistics. Last months inflation data also posted at 4% which shows inflation is remaining sticky in the UK. Markets were expecting a slight uptick again so a flatline is better than expectations for UK mortgage holders.

Sterling exchange rates have largely remained buoyant following the release as the prospect of interest rate cuts this quarter has decreased. GBPEUR remains within reach of the 19-month high. However, Cable (GBPUSD) exchange rates have come under pressure due to last night’s inflation data from the US. US inflation is also remaining stubborn and came out at 3.1%, but it is lower than the UK.

Only a matter of weeks ago, markets were pricing in an US interest rate cut in March. However, economic data from the US has remained resilient and supportive of a strong economy. Cutting interest rates too soon while the economy is performing well could cause inflation to balloon. The Fed will likely push back any rate cuts until the data supports it and this could put pressure on the value of the dollar.

Is a UK recession looming?

Sterling has been one of the strongest performing currencies of 2024 and has been largely supported by the prospect of higher for longer interest rates.

GDP (Gross Domestic Product) growth data is released tomorrow morning. GDP is considered the main measure of UK economic activity, and it confirms whether the economy is expanding or contracting. Current forecasts are expecting the data to confirm a technical recession (two consecutive quarters of negative growth) which would put considerable pressure on the value of the pound.

The Eurozone GDP reading is released this morning and is expected to show a slight expansion of 0.1%. If the UK economy is shrinking and the Eurozone economy is growing, sterling could be at risk of a sell-off.

Currently, the pound is in a strong position, but the next 24-48 hours could be pivotal for rates moving forward.

Please contact me directly via richard.nugent@lumonpay.com if you have any upcoming currency requirement.

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Could the Pound be influenced by this week’s busy economic calendar? https://www.poundsterlingforecast.com/2024/02/could-the-pound-be-influenced-by-this-weeks-busy-economic-calendar/ https://www.poundsterlingforecast.com/2024/02/could-the-pound-be-influenced-by-this-weeks-busy-economic-calendar/#respond Mon, 12 Feb 2024 09:13:45 +0000 https://www.poundsterlingforecast.com/?p=43069 After a fairly muted start to 2024 for GBP exchange rates, the outlook what which factors could influence the currency moving forward have become clear.

The Bank of England, European Central Bank and the Federal Reserve Bank in the US are all expected to begin cutting interest rates later this year. But the BoE differs in that the cuts are expected to begin later this year, and the number of cuts is expected to be slightly less.

This is due to the inflationary pressures within the UK remaining elevated compared to the UK’s peers.

Moving forward, data releases which show signs of inflationary pressures expanding or contracting along with the UK’s economic health could influence the BoE’s monetary policy changes and therefore the Pound’s value.

A busy week of economic data releases is due this week which could influence the Pounds value, especially if the data releases deviates from the market expectations.

Later today the Governor of the BoE, Andrew Bailey will be speaking at Loughborough University. He voted in favour of keeping rates on hold at the BoE’s last vote and as ever his choice of language when describing the economy will be closely followed.

Monthly wage data is due for release on Tuesday and Inflation data will be released on Wednesday in the form of CPI. UK GDP figures are due out on Thursday. Thursday’s release will determine whether the UK has dipped into recession or not so GBP exchange rates could come under pressure if the growth in Q4 of 2023 was lower than expected.

Retail Sales will then be released on Friday which is an economic update that can cause volatility for the Pound too.

Generally speaking, better than expected data released could push back the BoE’s plans to begin cutting rates and could see the Pound strengthen.

If you’re planning on making a currency transfer and would like to obtain quotes, market updates and opinions, please feel free to contact me directly on joseph.wright@lumonpay.com

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What are the latest pound sterling forecasts? https://www.poundsterlingforecast.com/2024/02/43066/ https://www.poundsterlingforecast.com/2024/02/43066/#respond Thu, 08 Feb 2024 08:46:02 +0000 https://www.poundsterlingforecast.com/?p=43066

Pound still forecast to be on negative trajectory

Here at PSF, we have access to the latest market research and FX forecast data. That is why, when clients come to us for support and assistance with their currency transactions, they know they can rely on authoritative and trusted data.

To be clear, predicting and forecasting is not wan exact science. Contrary to popular belief, no one on this planet can totally and accurately predict future FX rate movements.

Why is this? Because the FX rates move owing to the unfolding of future events. And whilst there are technical analysis of behaviours that will often and typically ring true, it is the fundamental drivers which shape the bigger movements.

As an example, think Brexit. The market and indicators all suggested a Remain vote and sterling strength. The probabilities were put at 80-90% Remain win on the close that evening, Nigel Farage pretty much conceded. And then, it became clear Leave had won, and the pound tanked.

Whilst many did correctly predict a Leave vote win, and the pound to weaken. No one could have 100% guaranteed it beforehand, because it was not known.

Sterling predictions for the coming months

Out of the 50 or so forecasters we have surveyed, a majority predict sterling to be lower against the Euro and the US Dollar forecast is more mixed.

For GBPUSD, we see a three-month range over 1.30, but a low below 1.20. The average takes us a cent lower, but this could be very susceptible to change.

For GBPEUR, the profile of the mean remains on slight downward trend, with a range from 1.11 – 1.20 over the coming three months.

This is just the summary, and we would be most interested to share more of the raw data behind this and help with your strategy and planning. Whilst you can google search and read the business sections in newspapers, you may not find the comprehensive and detailed analysis we can provide and have access to.

Thank you for reading, for a free, no obligation FX consultation for your personal or business transfers, please reach out to us directly.

Jonathan Watson

Jonathan.watson@lumonpay.com

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Sterling back above 1.17 against the euro – where will rates go next? https://www.poundsterlingforecast.com/2024/02/sterling-back-above-1-17-against-the-euro-where-will-rates-go-next/ https://www.poundsterlingforecast.com/2024/02/sterling-back-above-1-17-against-the-euro-where-will-rates-go-next/#respond Wed, 07 Feb 2024 09:52:37 +0000 https://www.poundsterlingforecast.com/?p=43064 Pound Sterling recovered against the euro yesterday afternoon and climbed back above the key 1.17 threshold. This was preceded by a poor reading of retail sales data from the Eurozone which did not support the value of the single currency.

Eurozone retail sales are down 0.8% on a monthly basis and 1.1% on a yearly basis vs expectation of 0.9% and 1% respectively. A struggling retail sector could support the premise for an interest rate cut sooner rather than later. The European Central Bank will be digesting the data and monitoring the next round of inflation data closely. German data is released on Friday morning and can have a big impact on the wider Eurozone economy given the size of Germany.

If inflation continues to drop and the jobs and retail sector struggles the ECB will have to act on interest rates to avoid a recession. Current expectations are for interest rates to be cut by 125 basis points this year. That would bring Eurozone interest rates down from 4.5% to 3.25%. Compare this with the UK expectations of 5.25% to 4.5% and you can see why the pound is currently holding its ground against the euro.

However, higher for longer interest rates could begin to have a negative affect on the UK economy which narrowly avoided a recession this quarter.

Central Bank Speakers

Exchange rates fluctuations could be driven by commentary towards the end of this week with several central bankers set to speak. Member of the BoE Catherine Mann is speaking tomorrow, and she voted for an interest rate hike at the last meeting. Philip Lane, chief economist for the ECB will speak shortly afterwards and financial markets will be looking to digest what both have to say regarding future policy.

For expert guidance on international payments and market leading information please reach out to me directly on richard.nugent@lumonpay.com

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GBP exchange rates remain strong as interest rates remain at 15-year high https://www.poundsterlingforecast.com/2024/02/gbp-exchange-rates-remain-strong-as-interest-rates-remain-at-15-year-high/ https://www.poundsterlingforecast.com/2024/02/gbp-exchange-rates-remain-strong-as-interest-rates-remain-at-15-year-high/#respond Mon, 05 Feb 2024 09:22:55 +0000 https://www.poundsterlingforecast.com/?p=43062 Last week the Bank of England voted to keep interest rates on hold for the 4th consecutive time. Whilst this was expected in the lead up to the decision, we have seen a change in the voting patterns of the 9-voting members.

The rate will remain at 5.25% and the vote was a 6-3 split. Interestingly one member of the BoE’s Monetary Policy Committee voted for a cut so could this be the start of a change of approach and could this impact GBP exchange rates moving forward?

For some time now, the expectation from financial markets is that the between the Bank of England, European Central Bank and the Federal Reserve Bank in the US, it will be the BoE that will keep interest rates at elevated levels for the longest.

Between now and the end of the year, cuts of 0.75% is expected from the BoE whereas for the ECB and the FED the predictions are for in excess of 1%. Any deviations from these expectations carry the possibility of influencing the underlying currencies, so keep an eye out for any changes to the current outlook.

Inflation data along with the economic health of each economy will be important for this outlook, and the voting patterns from the Central Banks along with commentary and speeches from key personnel within Central Banks can also cause market reactions. For example, just yesterday evening in a pre-recorded speech US Fed Reserve Chairman Jerome Powell suggested that the markets are pricing in too many cuts from the Fed this year.

The US Dollar has strengthened off the back of these comments.

Economic data releases this week are light which will give the markets time to digest last week’s updates.

If you would like to discuss an upcoming currency transfer, exchange rates and timings do feel free to get in touch with me (Joe) directly on joseph.wright@lumonpay.com and I will be happy to offer opinions along with competitive exchange rates.

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